1601 N. Tucson Blvd. Suite 9
Tucson, AZ 85716-3450
Phone: (800) 635-1196
Hotline: (800) 419-4777
Association of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto

Volume 48, No. 1 January 1992


One way of ``giving'' medical care to our citizens is by simply not taking their money away from them in the first place, notes Robert Cihak, MD, of Aberdeen, WA.

For the government to fund medical care, it must first take money-from taxpayers, or, in the case of deficit financing, from future generations. As the tax bite increases, resistance also increases, leading the government to search for more innovative methods. Cost shifting is one. A hospital administrator estimated that everyone's hospital bill could be reduced by 41% if all patients paid the full cost of their care. As commercial insurers have begun to resist the hidden sickness tax, governments have found a more direct method of taking: price controls on providers of services. For example, it was politically impossible to raise taxes again in West Virginia. Yet the state was not only able to keep its promises to its beneficiaries but to realize a $21 million surplus in the Public Employees Insurance Agency.

``This is about equal to the amount of money taken so far from the states' health care providers [as a result of the Omnibus Health Care Cost Containment Act],'' stated Jerome Arnett, MD, who spoke at the AAPS 48th annual meeting about a physicians' challenge to this legislation.

Are Takings Constitutional?

The Fifth Amendment to the US Constitution provides that private property shall not be taken for public use without just compensation. Property rights may encompass certain intangibles, such as contract rights (Omnia Commercial Co. v. US, 261 US 502 (1923) or the right to obtain a divorce (Mullane v. Central Hanover Bank & Trust Co.). A taking occurred when, as ``a result of legislative enactment, it was impossible for parties to engage in their business profitably'' (Keystone Bituminous Coal Assn v. DeBenedictis, 107 S. Ct. 1232 (1987)). In the opinion of Oliver Wendell Holmes, ``every man has a property interest in his own person....The labor of his body and the work of his hands we may say are properly his'' (The Common Law).

Logical as it may seem to consider medical services as a form of property, courts have not been willing to apply the protection of the Takings Clause to physicians. The US Court of Appeals for the Fourth Circuit held that federal statutory provisions limiting physicians' charges to Medicare patients do not constitute a taking because ``the regulated group is not required to participate in the regulated industry'' (Metrolina Family Practice Group P.A. v. Sullivan, CA 4, No. 90-2320, 3/25/91). Furthermore, the regulations satisfy the due process requirement because they have a ``reasonable relationship to a proper legislative purpose [spending money in aid of the `general welfare' while protecting the federal treasury and elderly beneficiaries] and are neither arbitrary nor discriminatory'' (BNA's Medicare Report 7/26/91).

The Fifth Circuit Court has ruled that requiring a physician to perform services under ``Anti-Dumping'' legislation does not constitute a taking (Burditt v. Sullivan CA 5, No. 90-4611, 7/9/91) [see AAPS News, Sept 1991].

Gammon's Law

Although the government might be able to repeal constitu- tional protections for physicians, there is another law that is outside their jurisdiction. One such natural law was enunciated by a British physician Max Gammon. His ``theory of bureaucratic displacement'' states that in ``a bureaucratic system...increase in expenditure will be matched by fall in production...Such systems will act rather like `black holes' in the economic universe, sucking in resources and shrinking in terms of `emitted' production'' (Wall St J 11/12/91). In other words, the more the government takes, the less it gives.

Examining input and output in medical care before and after the enactment of Medicare, Milton Friedman concludes that Gammon's Law is in full operation (ibid.) Since 1946, hospital personnel per occupied hospital bed multiplied nearly seven-fold and cost per patient day, adjusted for inflation, rose 26-fold. A slow rise in input before the enactment of Medicare became a meteoric rise afterward. At the same time, the number of beds declined rapidly. Growing costs led to increasing regulation, which may have played a major role in the cost explosion, though comprehensive data are not readily available. At the same time, Friedman argues that improvements in health status suddenly slowed.

Friedman asks why we should expect to be any better at socialism than the Soviets. Instead of increasing the scope of socialism, as most current ``reform'' proposals advocate, he calls for moving in the opposite direction, toward reprivatiza- tion. The biggest impediment is the huge constituency of people involved in administering the current socialized system, including a large private-sector component that has adjusted to it. ``They are sufficiently potent politically to kill any such reform,...just as the educational bureaucracy has repeatedly killed even modest programs for privatizing education.''

A Safety Net for a Sinking Ship?

The result of taking in order to give was described by Michael Walker of the Fraser Institute in Vancouver, Canada:

``Rather than throw a group of drowning people life preservers, the government sinks a yacht so they can cling to the wreckage.''

Without Malice Aforethought

[For perspective on the present rule of law outside of medicine, this article by Petr Beckmann, DSc, is excerpted with permission from the Dec. 1991, issue of Access to Energy.]

It is curious that energy-plutonium and oil-should be the background of two legal decisions that may be the most important in the ongoing collapse of American justice.

The first was Silkwood v. Kerr-McGee, which established the principle, so far only for corporations, that Innocence is no defense. Kerr-McGee had fully complied with the law, and the plaintiffs were unable to point to a single case where a law or regulation had been violated. But after an emotional media campaign with false accusations, a jury nevertheless found the defendants guilty of ``negligence'' and awarded more than $10 million in damages. It used to be typical only of totalitarian states that compliance with the law was no guarantee against being found guilty, especially if the victim was a member of a group singled out for fanning public resentment, such as the Jews or the members of the former ``bourgeoisie.'' Nowadays, the big, evil corporations fit the bill.

The second was the US and Alaskan government vs. Exxon,...in which a second totalitarian principle, so far again only for big corporations, was established: Crime does not require intent. Intent used to be what distinguished murder from manslaughter and a premeditated misdeed from an accident. ``With malice aforethought'' is the old English legal phrase charging a misdeed and stressing that it was not accidental.

But Exxon was charged under the Migratory Bird Treaty Act with killing migratory birds without a permit, and under the Refuse Act with dumping waste without a permit. I shed few tears for a corporation that thinks it can buy itself free from the sham-environmentalist wreckers by paying them millions in protection money....What I do fear is that this travesty of justice...will eventually hit the private citizen....

Such abuses are invited by the absence of risk to the litigating spongers. In all of Europe, the loser pays court costs; in American, the government even hands out your money to ``interveners'' for their barratry.

However, this type of abuse only makes the country poorer...There are denials of justice that directly threaten civil liberties. In what country under the rule of law could a man get 10 years in prison in a first-offense burglary in which nothing was stolen and no resistance offered to the police? Only in America can political vengeance be inflicted in this way: it happened to Gordon Liddy at Watergate. Only in America can the accused be denied a fair trial because the government first confiscates all his assets under the RICO act; thus effectively deprived of a legal defense, he is then blackmailed into pleading guilty to a lesser offense, and (as happened to Milken) even then the government can simply renege on its promise.

Then there is trial by accusation and by political correct- ness...Such drift into totalitarian lawlessness...cannot be patched up by formal reform of the law, for it grows out of the deeper soil:...the coercive ideologues fan resentment against the producers while protecting the parasites. It is on this level that the collapse of justice must be stopped.

The alternative for the individual citizen is what has already arrived for corporations: Innocence is no defense, and crime does not require intent.


The Doctor-Patient Relationship in Restructured Medicine: Lessons from Public Psychiatry

In 1982, the absence of a doctor-patient relationship helped kill 19-year old Judith Singer, previously in excellent physical health, six days after she was readmitted to a New York State Psychiatric Center for manic-depressive psychosis. No psychia- trist was able to calm this frightened girl by talking with her. She distrusted the staff and refused to take oral medication. Thirteen psychiatrists in four different hospital wards then ordered 34 injections of seven major psychopharmaceuticals. They also ordered physical restraints for most of her hospital stay, during which she lost 23 pounds.

A patient with overwhelming or disorganizing problems may pour his heart out to a psychiatrist-or to any doctor. If that physician is then prevented administratively from ever seeing him again, his hopes will be dashed. Public psychiatric care in American is increasingly structured to prevent such relationships from continuing.

Most mental-hospital discharges now living in our streets are products of fragmented care and wrecked doctor-patient relationships. Susan Sheehan's 1982 book, Is There No Place on Earth for Me? vividly delineated the discontinuous and disorganizing treatment and how it can render insane those who are not crazy already. The harmful consequences are described in two 1990 books, Johnson's Out of Bedlam and Isaac and Armat's Madness in the Streets.

Our complicated psychiatric ``care system'' is often blamed, but nothing is simpler than organizing care around one physician caring for a patient as long as treatment is needed. Cambridge, England, had such a public mental health care system in 1978. Patients from a geographic area were treated on the same ward, and the same doctor followed them after release to a clinic or day hospital. A similar system had been set up in 1976 at Kingsboro Psychiatric Center in Brooklyn, where I was Clinical Director. But political administrators replaced both systems with complicated ones, in which each patient was treated by a series of psychiatrists.

Since 1980, the American Psychiatric Association has been publicizing a redefinition of ``continuity of care,'' which endorses such complicated systems. The term had meant having the same doctor treat the patient whatever the treatment setting, but the APA accepted Bachrach's definition, ``the orderly, uninterrupted and unlimited movement of patients among diverse elements of the service delivery system.''

That definition accepts fragmented care as a given. It says nothing about the doctor-patient relationship. Faced with the impossible task of making effective the hospital and aftercare treatment provided by different organizations, nonmedical psychiatric administrators now call for bureaucratically ``linking hospital and community programs on a regional basis''- again without mentioning doctors and their patients.

The fiscal costs are as great as the therapeutic. A 1982 comparison of care for the mentally disabled in Cambridge with New York State's found that Cambridge did better with less than 40% as many personnel.

Restructuring medical care is a hot political issue...If we do not learn from public psychiatry's errors, and fail to preserve doctor-patient relationships, reorganized medical care may harm its patients as much as public psychiatry sometimes does.

Nathaniel S. Lehrman, MD, Roslyn, NY

Seventh Circuit Rules that PROs Have Absolute Immunity Despite Wording of Statute

As the federal government has expanded its role in medical care, the federal judiciary appears to share the belief of most officials in the legislative and executive branches: the total regulation of the medical profession and the total elimination of the fundamental rights of physicians are both desirable national goals. On the heels of the Fifth Circuit decision in Caine v. Hardy (which eliminates the Civil Rights Act of 1871 as a viable cause of action when state agents deny a person property without due process of law-see AAPS News, Nov. 1991), the Seventh Circuit Joint of Appeals has joined the Eight Circuit in ruling that Peer Review Organizations (PROs) and their physician members are absolutely immune from liability for decisions they make in the Medicare sanctions process (Wood v. Freeman, 7th Cir., 10/25/91).

The Social Security Act seems to be clear when it comes to immunity from civil liability for PROs and their agents:

No organization having a contact with the Secretary under this part and no person who is employed by, or who has a fiduciary relationship with, any such organization, or who furnishes professional services to such organization, shall be held by reason of the performance of any duty, function, or activity required or authorized pursuant to this part or to a valid contract entered into under this part to have violated any criminal law or to be civilly liable under any law of the United States or of any State (or political subdivision thereof) provided due care was exercised in the performance of such duty, function, or activity- U.S.C. §1320c-6(b).

Clearly, this statute grants immunity, but it is not absolute immunity. The PRO and its agents are not licensed to be negligent in the performance of their functions. If it were found that a PRO and its agents failed to exercise ``due care,'' there would be no immunity from civil liability. This is the unequivocal wording of the statute.

The Seventh Circuit reads it differently. In dismissing a physician's complaint against PROs and their agents for the entry of sanction recommendations against him, the Court opined that the aforementioned statute grants to PROs and their physicians immunity irrespective of whether ``due care'' was exercised. In other words, this shocking opinion grants absolute immunity.

Russell J. Wood, MD, filed a civil action in the US District Court in Illinois against two PROs and their physician members, alleging violations of the constitutions and antitrust laws of the United States and Missouri and various common law torts. The District Court dismissed the case. Affirming the dismissal, the US Court of Appeals for the Seventh Circuit cited a 1991 opinion of the Eighth Circuit in Kwoun v. Southeast Missouri Professional Standards Review. The Courts held that absolute immunity ``leads to an effective, efficient, and economical Medicare program,'' and is ``essential for the conduct of public business in this critical health care area.''

This reasoning represents judicial activism at its worst. The courts simply chose to ignore the standard of ``due care'' that Congress incorporated into the statute. Then, they bolstered their grant of absolute immunity by citing public policy considerations as though they were enacting the statute rather than interpreting it!

Circuit Judge Richard D. Cudahy of the Seventh Circuit dissented in Dr. Wood's case. Cudahy wrote that though the PRO and its agents might be accorded ``qualified immunity,'' he was ``not persuaded that they were entitled to a more sweeping absolute immunity.'' He properly noted that Congress could have provided for absolute immunity in the statute, but by implication rejected it.

What the Seventh and Eighth Circuits have done is occurring with ever increasing frequency in federal courts. In their rush to close the federal courts to civil litigation-``judicial restraint'' it is called-judges are choosing to read statutes in a way that fulfills their own purpose. At a minimum, this is blatantly arbitrary decision-making. Such result-oriented rulings undermine the role of the judiciary in our constitutional system and erode citizens' confidence in the role of the courts.


Virginia Supreme Court Says Legislature May Discriminate

In November, 1991, the Virginia Supreme Court ruled against physicians who challenged the constitutionality of the Injured Infants Act. This Act, which is similar to the Florida Birth- Related Neurological Injury Compensation Act, removes certain claims against physicians who practice obstetrics from the traditional tort system. It requires physicians who do not practice obstetrics to pay an annual assessment of $250 to fund the system.

In its ruling, the Court stated that ``all statutes enacted by the General Assembly are presumed to be constitutional.'' Challengers have the burden of proof, and ``any reasonable doubt as to the statute's constitutionality must be resolved in favor of its validity.''

Physician plaintiffs argued that the Virginia Constitution prohibits ``special laws'' that grant an exclusive right, privilege, or immunity to any private association or individual. The Court responded that this constitutional provision ``does not prohibit legislative classifications,'' as long as the classifications are ``natural and reasonable, and appropriate to the occasion.''

A classification will not be invalidated [under the Equal Protection Clause] merely because it results in some inequality or some discrimination...if the legislature could have reasonably concluded that the challenged classification would promote a legitimate state purpose....A statutory discrimination will not be set aside if any state of facts reasonably may be conceived to justify it [emphasis added].

The Court reasoned that the Anti-Discrimination Clause in the Virginia Constitution refers only to ``governmental discrimination upon the basis of religious conviction, race, color, sex, or national origin.''

The opinion did not address the taxation issues raised in the similar Florida case, Coy v. NICA, which is still pending. The American Health Legal Foundation contributed to the Virginia case, which was funded through the Physicians' Constitutionality Challenge Group. An appeal to the US Supreme Court is being considered.

New Members

AAPS welcomes Drs. David Anderson of Anchorage, AK; Robert Baker of Tucson, AZ; John Bauscher of Aberdeen, WA; Karl T. Benedict, Jr. of Weston, MA; David E. Berckmueller of Tiffin, OH; Robin Bernhoft of Everett, WA; Wayne Bryant of Hoquiam, WA; Russell Burgess of Augusta, GA; Bill Coyne of Aberdeen, WA; Harry Anderson Dollahite of Ft. Worth, TX; Michael P. Ederer of Mobile, AL; Bertram Feingold of Scottsdale, AZ; Michael Ferdinands of Bettendorf, IA; Irwin Finkelstein of Mesa, AZ; Ronald L Fraser of Richmond, TX; Douglas L. Gaker of Middletown, OH; Edward Gallagher of Saratoga Springs, NY; T. Kirkland Garner of Atlanta, GA; Phillips L. Gausewitz of San Diego, CA; Phillip Gibbs of Aberdeen, WA; Christin P. Glavey of Alpharetta, GA; T. Murphy Goodwin of Monrovia, CA; Craig Hall of Hackensack, NJ; Michael Hannan of Aberdeen, WA; W. Kirk Harris of Aberdeen, WA; Edward P. Hoffman of Olympia, WA; Gerald B. Hogsette of Aberdeen, WA; David F. Horton of Olympia, WA; W. Steve Hutton of Aberdeen, WA; James R. Ingram of Sumter, SC; Russell M. Jaffee of Skillman, NJ; Charles D. Jennings of Great Falls, MT; Peter M. Johns of Littleton, MA; Thomas R. Johnston of Ada, OK; Robert C. Jordan of Winston Salem, NC; Eleazar M. Kadile of Green Bay, WI; Ed Kilgore of Aberdeen, WA; Jeffrey H. Kiviat of Alton, IL; J Kondola of Pascagoula, MS; David E. Konn of Aberdeen, WA; Paul P. Krikorian of Dover, NJ; Ross Levatter of Phoenix, AZ; Richard Lewis of Hoquiam, WA; Dave Loken of Mercer Island, WA; Brian Lueth of Everett, WA; Judith Marsden of Seattle, WA; Tom Mattice of Granger, IN; Scott J. McCorkell of Seattle, WA; Albert Menduni of Tallahassee, FL; Michael Miller of Houston, TX; Pat Mongan of Augusta, GA; Bob Mysliewiec of Hoquiam, WA; Fred Ng of Raleigh, NC; Mark Niclanovich of Santa Cruz, CA; Richard F. Ott of Fort Lauderdale, FL; Peter Overstreet of Toledo, OH; Michael Pecararo of Hackensack, NJ; William J. Peters of Hoquiam, WA; Henry Rosen of Midland Park, NJ; Kimra Ross of Joplin, MO; Steve Sacks of Plymouth Meeting, PA; Mitchell Simons of Southgate, KY; Will Stewart of Las Vegas, NV; Dick Sypherd of Hoquiam, WA; James Szwed of Indianapolis, IN; Charles Thompson of Aberdeen, WA; Jane Tonkin of Monterey, CA; Mike Trygstad of Elma, WA; Marsha Hoffman Vaile of Lakeland, FL; Richard Wall of Colorado Springs, CO; Terrence B. Welsh of Portsmouth, OH; Thomas L. Yearwood of Mobile, AL; and George S. Young of New Orleans, LA.

New medical students from Ohio are: Gregory M. Abbas, Shahab Abdessalam, Brian K. Adams, Peter J. Adams, Vlad Alexander, Tahir Ali, Rita L. Arend, Steven P. Balaloski, David M. Barrere, Mario Brunicardi, Mark Alan Buddie, Douglas B.

Carr, Wei Chen, Walt Chlysta, Elena A. Christofides, Craig Cole, Bridget Y. Cottrill, David Cummin, Laurie Dashner, Brian Delay, David A. Epstein, John Fry, Anthony Gabriel, Anne E. Gasior, Merrill Lee Gladden, Jr., Steve Greer, Cathy Greiwe, Matthew T. Hazelbaker, Bernt Helgaas, Ann M. Hickey, John Hoitink, Mike Hummel, Irene Katzan, Frank M Kelley, Keith Kellum, Miguel Kerlado, Jennifer F. Kloesz, William Konomos, Thomas Krivak, Thomas F. Lee, Brian Leon, Hannah Lim, Edwin Long, Michelle Mackey, David R. Marques, Michael S. McLeod, Dave Michael, Thomas J. Nero, Kerry Owens, Laurel E. Parker, Shawn Reinhart, Bob Sawyer, Bert Silich, Bernadette Y. Smith, David Streem, Kiran Tipirneni, David Venesy, Stephanie A. Wellman, and Richard Yu.

Other new student members are: Carole Bresnahan, Sherry Galt, Ken Gossler, Daniel E. Kates, Greg Labenz, and Rebecca Pollak, all from Arizona, and Teresa Lugo Fagundo, Nordeli Estronza, and Rub‚n A. P‚rez of Puerto Rico.


Where Will It End?

The most important fear that Senator Joseph Biden had about Justice Clarence Thomas was his view on constitutional protections of private property. Since the New Deal, federal and state officials have regularly violated private property rights. If the courts were to start enforcing the Takings Clause, particularly with regard to regulatory takings, where would it all end (Wall St J 11/27/91)?

One example is a $28.4 million suit filed by Nevada cattle ranchers against the US Forest Service for barring access to land on which they own the water rights, without paying compensation (CEI Update Oct 1991). Another is the case of Lucas v. South Carolina Coastal Council, which the US Supreme Court has agreed to hear this session. David Lucas saw the value of his property drop to $0 when the state declared he could never build anything on it, lest he contribute to beach erosion that would damage his neighbor's property value. The action was justified on the basis of the exercise of ``police power,'' which does not require compensation.

If the Takings Clause can be enforced, then what about the Contracts Clause that formerly protected private agreements from government interference?

AAPS Calendar

Jan. 31, 1992. Board of Directors meeting, New Jersey.

Feb. 1, 1992. Medicine and Freedom: the Doctor, the Government, and the Law, Pascack Valley Hospital, Westwood, New Jersey.

Oct. 15-17, 1992. Annual Meeting, Seattle, WA.

Legislative Alert